Caribbean countries are familiar with the risk that comes with a lack of food sovereignty. It has long been the case that between 80 and 90 per cent of all food consumed in the region (in the amount of about $6 billion according to the latest numbers) originates from foreign countries, creating greater uncertainty between the months of June to November when there is an elevated risk of hurricanes.
With COVID-19 the paradigm has shifted. The region is not looking at a national or regional crisis— it is faced with most far reaching global crisis in history, and unlike a natural disaster that has the potential to shut down the cargo ports of one or more Caribbean countries, the region is likely to face reduced and interrupted supplies from its primary source of food— the United States.
With COVID-19, the lens through which we have typically looked at food insecurity in the Caribbean … [+]
Here are five reasons why the lens through which we have typically looked at food insecurity in the Caribbean has changed.
The primary source of foreign exchange has temporarily dried up
Travel & Tourism is a key economic driver and foreign exchange earner in the Caribbean. In Jamaica alone, the sector accounts for 58 per cent of all foreign exchange earnings. Caribbean Economist and Advisor, Marla Dukharan predicts that in a COVID-19 worst-case scenario, the Caribbean region could lose up to 83 per cent of its tourism earnings on average— which would hurt reserves and significantly impact those countries with a high agricultural trade deficit.
Caribbean Economist and Advisor, Marla Dukharan
According to Dr. William Warren Smith, president of the Caribbean Development Bank, “the resilience of our foreign reserves will depend on whether countries have foreign exchange buffers, the duration of the travel impact, and the export concentration in relation to travel receipts.”
But even for the less tourism-dependent countries such as Trinidad, the COVID-19 driven reduction in global oil demand will have a significant effect.
For the average country, the uncertainty of the duration of the crisis coupled with the lack of foreign exchange buffers (given the global nature of the economic shock) will have a negative impact on countries’ means of importing food.
Says Marla Dukharan, “We know that our lack of food security means we have to import, so this means we have to earn sufficient foreign currency to purchase these goods from abroad… It means we have to be competitive internationally at whatever we do, in order to continue to earn sufficient foreign currency to import enough to satisfy our growing needs and wants… It means that in a time of crisis, we are at greater risk, if shipping lines, global supply chains, exporters abroad and importers domestically, are affected.”
The Caribbean is facing a potential socio-economic crisis
COVID-19 has created multiple socio-economic challenges simultaneously throughout the region. According to Marla Dukharan, these include “a health crisis, sudden-stop of economic activity, volatile financial markets, weak investor confidence, capital flight, exchange rate volatility, tighter financial conditions, price shocks, lower remittance inflows, and reduced availability of traded goods.” (COVID-19 Caribbean Economic Impact Report)
At an individual level, layoffs and the temporary closure of non-essential services means that the population will have less disposable income. The closure of schools will result in children losing access to nutritious school meals.
Fiscally, local economies will suffer from a reduction in tourism-related tax revenues, while coronavirus containment and social support mechanisms will create greater demands on governments.
Socio-economic impacts could be compounded by increases in food prices. Heightened demand for food, reduced production, altered supply chains, transportation issues, heightened restrictions and food safety issues as well as dramatic changes in share and oil prices are all factors that could lead to food inflation.
Output from the United States could be impacted
Caribbean food supply is heavily reliant on imports from the United States. According to data from the International Trade Centre (ITC) the 15 nations of the Caribbean Community (CARICOM) source up to 94 per cent of their food imports from the US market (2018). 94 per cent of all CARICOM imports of cereals, 90 per cent of edible fruits and nut imports, 90 per cent of imports of edible vegetables and certain roots and tubers and 91 per cent of sugars and sugar confectionary imports originate from the United States (2018).
Output from the United States is likely to be impacted by the temporary closure of various food operations as well as the shortage of labour in all areas of the supply chain including production, inputs, transportation, processing and shipping. In harvesting, for example, it is predicted that there will be fewer seasonal field workers. Within the upcoming weeks and months, as key fruits and vegetables come into season, short ripening times and perishability will be compounded by reduced labour.
There could be a shut down in US exports
As workforce constraints cause a contraction in internal production, panic buyers empty supermarket shelves and import partners conserve their own food supplies, some states could reduce or temporarily discontinue food exports so as to preserve their own food security.
“The challenge for food security is that under the circumstances, traditional food exporting countries may revisit their export strategies and internal policies towards building reserves and distribution confidence in order to maintain the food and nutrition security of their populations. Trade logistics is also under pressure,” adds Trinidadian Agricultural Economist, Omardath Maharaj.
“Social media is already buzzing with videos of panic buying, food shortages and price gouging in different parts of the world and our early reactions locally. Quarantine, trade and economic slowdown put CARICOM members— more than 18 million people, in an awkward and exposed position in those dynamics.”
There are reduced markets for local agricultural outputs
Quarantines, border closures, food safety concerns and temporary business closures caused by shelter in place orders have affected traditional markets for agricultural output such as food shops, restaurants, vendors, hotels and airlines.
In Jamaica, for example, the Treasure Beach Hydroponic Farmers group in St. Elizabeth, which invested just under $75 thousand on its tomato harvest, of which 95 per cent was destined for local hotels, has been donating thousands of tons of its tomatoes, including specialty cocktail tomatoes, to government quarantine facilities due to the total closure of the hospitality sector.
This could drive heightened competition among farmers to secure alternative markets for produce and could lead to exploitation, reduction in profits and underinvestment in the agriculture sector.
An Opportunity in Disguise?
Agricultural Economists have argued that COVID-19 food security impacts could be a proverbial “opportunity in disguise” that could be mitigated through increased intra-regional trade.
“We don’t know when international borders will open back up for the region, so we must look within,” says Zachary Harding, Group CEO of SSL Growth Equity Limited (SSL Group) and Board Director of Caribbean Airlines Ltd. “Now is the time for breakthrough regional leadership to tear down the barriers and expedite inter-island food trade in order to be achieve some semblance of food security for our people. Caribbean Airlines and LIAT must work together to create an efficient food cargo network. What some countries need, others have in excess, and vice versa.”
Zachary Harding, Group CEO of SSL Growth Equity Limited (SSL Group) and Board Director of Caribbean … [+]
TAMICA PARCHMENT, JAMPRO
Domestic markets for food also have the opportunity to become more diversified with farmers and agriculturalists finding additional outlets for supply beyond the hospitality sector.
This crisis also provides an opportunity to cut down on the 33 per cent of food that typically goes to waste.
And finally, as the region becomes more economically stable, it has an opportunity to invest in agricultural technologies that can enhance climate and crisis resilience and yields while minimising reliance on limited arable land.
Currently, the United States decides what— and whether— most of the Caribbean eats. Perhaps COVID-19 could present the greatest opportunity in history for the Caribbean to become food independent. With COVID-19, the Caribbean’s over reliance on food imports from the United States is no longer just a crisis of food security; it is a crisis of national and regional security.